Saddam Hussein deposited £840,000 in a Swiss bank account belonging to the father of the British engineer murdered with his wife and mother-in-law in the Alps, it has been claimed.

Saad al-Hilli, 50, has been linked to the former Iraqi dictator through his father Kadhim, who was once close to the tyrant's Ba'ath party but fled his homeland for Britain in the 1970s. The money was reportedly deposited into an account in Geneva, an hour's drive from where the massacre took place on 5 September at a remote spot near Lake Annecy in eastern France.

Hilli, his wife, Iqbal, and his mother-in-law were shot while his seven-year-old daughter, Zainab, was left badly injured and her four-year-old sister, Zeena, deeply traumatised. A French cyclist was also shot dead and the motive for the killings remains a mystery.

A French police source revealed that the money had been traced to Hussein by the German intelligence agency, the BND, according to Le Monde. Agents routinely monitored cash transactions with Baghdad as Germany did more business with the regime than any other country.

An intelligence source in Munich was quoted as saying: "They know the money trail, and they know how to follow it. They have spent decades monitoring money transactions between the west and Iraq. The BND is the first port of call in such circumstances."

The BND said: "We do not comment on operations."

The Le Monde story was published under the headline "The potential links between the al-Hillis and Saddam Hussein."

It said: "According to a French police source, the German secret service informed the gendarmerie's anti-terrorist branch that there were links between the al-Hilli family and Saddam Hussein's fortune. The tensions began after Saad al-Hilli's father [Kadhim] was struck off the list of beneficiaries of the former Iraqi dictator."

When Kadhim died he left behind his considerable wealth in a will.

Le Monde identifies the money in the Swiss bank account – and not the inheritance – that may have been at the centre of the conflict. Swiss investigators discovered the secret account earlier this month, but according to Le Mondethey didn't make the link to Iraq.